ESG Integration pivotal in portfolio construction
Environmental Social and Governance (ESG) has become profoundly important to the way we perceive companies and capitalism itself. The embedded attractiveness of ESG is that it reminds us of the importance to look beyond the short term. It also informs the
way we consider ESG in our investment process.
Our approach to investing is defined by our long-term perspective and focus on the quality of the companies in which we invest. We seek to allocate capital to companies that can sustainably create economic value over the long term.
The prominence of ESG as a factor in shaping the discussion on corporate responsibility has been elevated recently with issues relating to conduct at Rio Tinto and Cleanaway Waste Management. Both these examples have raised key issues on the importance of accountable decision making and appropriate conduct for Australian boards and management teams.
We sold our position in RIO following a review of its decision to destroy a 46,000 year old indigenous rock shelter at its mine in the Pilbara. In our view, RIO manifestly damaged its reputation and its social license to operate.
By contrast, whilst the conduct of the CEO of CWY was extremely disappointing it has not irrevocably damaged CWY’s business franchise.
The accompanying table evaluates our assessment of CWY and RIO’s investment thesis: